Final answer:
The threat of new entrants in a market is high when there are low barriers to entry, allowing for easier access and increased competition in the market.
Step-by-step explanation:
The threat of new entrants is high when there are low barriers to entry. Barriers to entry are various obstacles that can prevent potential competitors from entering a market, ensuring that a company retains a significant amount of market power. These can be legal restrictions, technological challenges, or significant market forces such as brand loyalty or economies of scale. A lack of barriers can lead to perfect competition, where numerous firms compete and profits are driven to a normal level. However, when barriers to entry are substantial and difficult to overcome, it can lead to monopolistic conditions where few firms dominate and can earn substantial economic profits.